The number of workers nationwide filing new claims for jobless insurance fell to the lowest since January, government data showed today, pointing to improvements in the labor market.

Initial claims for state unemployment benefits dropped last week to a seasonally adjusted 502,000 from a revised 514,000 the prior week. Analysts polled by Reuters had expected initial claims to fall to 510,000 from an initially reported 512,000.

"It shows that companies are cutting jobs at a slower pace than during the financial crisis,” said Gary Thayer, chief macrostrategist for Wells Fargo Advisors in St. Louis.

“We’re trending in the right direction, but we are probably several months away from (rising) monthly payrolls numbers,” he said.

Initial jobless claims peaked in March at 674,000, nearly double what they were at the start of the recession in December 2007.

Treasuries held steady after the report was released, while stock index futures headed lower.

"The larger question is, are new jobs becoming available? I don’t think they are, and that’s why I don’t think the market will celebrate this today,” said Bruce Bittles, chief investment strategist for Robert W. Baird & Co in Nashville, Tennessee.

Employers have been cutting jobs at a slower pace than at the start of this year, but the jobless rate still jumped to a 26-year high of 10.2 percent in October and many analysts expect it will continue to climb.

The four-week moving average of new claims, considered a better gauge of underlying trends as it irons out week-to-week volatility, decreased to 519,750, the lowest since a matching level in the week ended Nov. 29, 2008. It has been dropping since August.

The number of workers still collecting benefits after an initial week of aid also fell, to 5.631 million in the week ended Oct. 31, the most recent week for which data is available. That was the lowest since March.